Car dealers upbeat, but wary of Tesla's plans

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BRISTOL — Area car dealers say they are bullish on new and used car sales in the first quarter of 2017. However, dealers the Press spoke with voiced concern about the repeated attempt of electric vehicle car manufacturer Tesla to open retail markets in the state.

Ken Crowley, president of the Crowley Auto Group, with seven locations in Bristol, Hartford and Plainville, is a leading Connecticut dealer of foreign and domestic manufacturers. Products include Chrysler, Dodge, Ford, Jeep, Lincoln, Kia, Nissan, Ram trucks and Volkswagen; recreational vehicles including Winnebago, Roadtrek and Evergreen; and a full line of commercial trucks.

Crowley said Washington’s Birthday kicked off strong sales interest at his dealerships.

"A lot of car buyers seem to wait for then." Trucks and SUVs, he said, now account for 60 percent of sales at Crowley.

He credits stormy weather and the fact that the price of gas hasn’t risen in recent months for the interest in heavier vehicles.

"Then, too the way that trucks are finished off now they’re beautiful as any car," Crowley said. "They have a smooth ride, are comfortable and get great mileage. As for SUVs, people like the size and four-wheel drive and the fact that you can drive to Costco, lower the tailgate, load up the back and you’ve got plenty of room."

Tony Braglia, general manager of Acura of Berlin, said Acura is now selling Range Rovers and building a state-of-the-art dealership on the Berlin Turnpike. The new facility will open in June.

"We’re looking to grow in the state," he explained.

As for sales, there has been a slight uptick in the first quarter of 2017. Acura of Berlin doesn’t sell to the "sub-prime market" and discourages buyers from long-term financing.

"Super-extended term financing is really a disservice to our customers," Braglia said. "We don’t want to see them in a situation where three or four years from now they can’t get out of their cars."

Braglia said he and his sales staff are seeing more consumer confidence, enabling them to build brand loyalty and a strong following. "But, with so much information out there [about new and used vehicles] it’s a challenge to keep our customers loyal and to keep taking care of them."

At Acura of Berlin, the used car market is growing faster than the new car market , with a dip in sedan sales.

"I don’t know if that’s just an Acura thing," Braglia said. "The sales trend is toward sport utilities. The past three months we’ve been heavy in SUV sales. The public recognizes it’s a good time to go car shopping."

Andrew Hall, Toyota general sales manager for Stephen Auto Mall Centre in Bristol, said new and used car sales have been strong in the first quarter.

"Washington’s birthday sales were very strong this year," he said. SUVs have been leading the way.

Like Braglia, Hall said sales of sedans have trailed SUVs. According to Hall, Toyota intends to build and sell 40 percent more trucks and light SUVs than in 2016, taking production away from passenger cars.

The "elephant" in car sales rooms has been threat of direct sales by West Coast car manufacturer Tesla.

The state legislature’s transportation committee is considering House Bill 7097 that would allow Tesla to sell directly to customers rather than through dealerships. Currently, the only physical presence Tesla has is a sales front in Greenwich and a service center in Milford.

Tesla has been lobbying for three years to open retail outlets in Connecticut. State law now prevents a vehicle manufacturer from also being a retailer.

Jim Fleming, president of the Connecticut Automotive Retailers Association, said recently that the bill "creates an unfair loophole in the franchise system and undercuts consumer protections."

Tesla deputy general counsel Jonathan Chang countered with his own statement.

"If passed, [Tesla] will promote American manufacturing and job growth, and help the state advance its goal of putting more e lectric

v ehicles on the road. ... Connecticut residents want the option to purchase directly from EV manufacturers like Tesla, and believe the [transportation] committee should support this legislation and vote in favor of clean energy, innovation and free enterprise."

Crowley said he doesn’t have a problem with Tesla coming into the state "as long as they play by the same rules we do. All dealers want is a level playing field, and that we all abide by the rules of the Motor Vehicle Department. Tesla has no service department; they will probably be selling at Westfarms mall in a storefront. They’re sold in Greenwich now, but owners have to get the cars serviced in Milford."

According to Crowley, Tesla direct sales would create a Pandora’s box, inviting cars made in India and China to be sold in Connecticut. "Once that door is open, the industry as we know it today will be hurt. In Connecticut, car dealers employ 14,000 people and create a huge payroll. So, when a customer gets in trouble with his car we can work with him on the lemon law. We become the customer’s advocate."

Braglia agrees that Tesla would be a game-changer.

"I don’t believe production levels of Tesla are going to affect the Acura brand," Braglia said. "But, what Tesla really does is challenge community involvement in towns where the dealerships are. Working for a giant, out-of-state corporation is different than working for a business down the street that cares about the local people."

Like Crowley and Braglia, Hall fears that if Tesla is allowed to sell vehicles in the state without a franchise agreement, the floodgates will be open to other car factory stores.

"When a dealer takes on a franchise he makes a commitment to build or maintain a physical structure," Hall said. "He hires employees who pay taxes and much of that tax money stays here in the state."